Snap, the company that makes Snapchat, is the latest tech company to lay off workers. On Monday, the company announced plans to cut its workforce by 10%. Based on Snap’s headcount numbers from November 2023, when it laid off a few of its more than 5,000 workers, the layoffs would affect more than 500 people.
An SEC statement said that Snap was letting people go, saying that the move was needed to help the company grow even more.
In order to put our business in the best situation to carry out our top priorities and to make sure we can invest little by little to support our growth over time, we have made the difficult decision to restructure our team, the filing said. “As a result, we expect to pay between $55 million and $75 million before taxes. Most of that will go toward severance and related costs, as well as other costs. Of this amount, $45 million to $55 million is expected to be paid for in cash in the future.”
Snap also said that most of those costs would happen in the first quarter of 2024. However, due to local laws and other reasons, some costs may last into Q2. The business will release its profit report on February 6 after the market closes.
A spokesperson for Snap told TechCrunch, “We are reorganizing our team to reduce hierarchy and encourage in-person collaboration.” “Our main goal is to support our departing team members, and we are grateful for all the hard work and support they have given Snap,” they said.
In just a few months, Snap has already laid off a smaller number of employees. This comes after the company reorganized its product team at the end of last year, with the goal of cutting down on layers and speeding up decision-making, as it said at the time. Nima Khajehnouri, Snap’s VP of Engineering, also quit at that time, along with a few other people in the product section. After less than a year, Snap shut down its business services division in September of last year. The company has also put money into hardware goods that haven’t paid off, like Snap Spectacles and its Pixy drone, which was recently recalled because it could catch fire.
When Snap reorganized in 2022, they let go of 20% of their staff.
Snap’s stock price went up at first after it reported its Q3 earnings in October. The company beat analysts’ predictions for both revenue and earnings per share, with $1.19 billion in revenue and 2 cents in earnings per share, compared to $1.11 billion in revenue and a 4 cent loss. The company also reported more users than expected, with 406 million daily active users around the world, up from the estimated 405.7 million. The business had a net loss of $368 million in the quarter, which was 2% more than the same time last year.
Snapchat warned investors that the ad market was still unstable, even though the company’s earnings were better than expected. It said that some of its clients’ ad campaigns had been put on hold. Research firm Insider Intelligence says the company has a 0.6% piece of the world’s digital ad market. The company thinks that Snap will make $4.12 billion from ads around the world in 2024.
Principal analyst Jasmine Enberg said, “The layoffs don’t look good for Snap’s business before its Q4 2023 earnings.” “Snap’s report is hard to follow after Meta’s hugely successful report. Snap is probably trying to win over investors, who praised Meta for cutting costs and sticking to its “do more with less” mantra until 2024. “We expect Snap to report a 3.3% drop in ad revenue from 2022 to 2023,” Enberg said.
According to its Q3 press release, Snap had 5,367 workers at the end of the quarter.
According to Business Insider, Snap started letting go of employees on Friday, when several dozen were let go before the company made an official statement. The story said that this week there would be more job cuts.
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According to The Information, some top employees are being let go. These include Sam Corrao Clanon, who is director of content, Ding Zhou, who is vice president of content engineering, and Konstantinos Papamiltiadis, who is vice president of platform partnerships.
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